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Chapter 1: What is discussed at the start of this section?
Brought to you by the EveryDollar app. Start budgeting for free today. Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union Studios, this is The Ramsey Show. I'm Dave Ramsey, Rachel Cruz, Ramsey personality, number one bestselling author, co-host of the Smart Money Happy Hour.
My daughter is my co-host today. Open phones at 888-825-5225. Thanks for hanging out with us. Phil is in Orlando. Hi, Phil. How are you? I'm doing well, Dave. How are you? Better than I deserve. What's up?
Yeah, so I'll keep this as short as possible. I'm 28 years old. I've put myself into kind of a corner over the past couple of months after some bad decision-making. I'm somewhere around 200 grand in debt, which is a mix of credit cards and personal loans that I took out, which I shouldn't have. I also have a mortgage. um, which is, uh, relatively new.
Uh, I make good money, but, uh, ultimately, uh, things are tight right now. And I'm curious to get your thoughts on whether or not debt consolidation is a wise choice, or if I am better off, uh, just, uh, essentially figuring it out and, um, you know, climbing back into, into a better place. What do you make? Um, salary is about 140, but, uh,
I make probably – well, this year I'll probably net $400 after stock units.
And that includes cashing those in, or are those restricted? They are restricted, yes. Okay, so what is your income that you can use this year?
Okay. Yeah, well, this year, like I said, I mean, I put like 400 total.
But you can't use the restricted stock units. You can't sell them. They're restricted. That's the nature of the beast.
Right, right, right. Yeah, like 150 vestibule share of sellable throughout the remainder of the year. Plus, yeah, I mean, 140 divided by two, call it halfway through the year. So, I mean, yeah, call it 200 coming in through the remainder of the year.
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Chapter 2: How much debt does the caller have?
Oh, yeah, that's fairly easy to come up with the last part of that.
Is there anything you bought that is sellable in this, or is it all gone in things like gambling or other things?
No, I mean, home improvements have definitely been a thing. I mean, I just bought the house maybe a little less than a year and a half ago and definitely have put money into the home because we had some issues with But otherwise, yeah, sort of just bill payments slash, yeah, threw money away, which is... Okay, so here's the thing.
Personal finance is 80% behavior. It's 20% head knowledge. So debt is never, including when I went into debt and lost my butt because I was stupid, debt is never the problem. It's always the symptom. Yeah. Okay. So this is the symptom of gambling and, in air quotes, poor decisions, whatever the flip that means. Okay. And so it doesn't matter if we waved a magic wand and the 200 went away.
It's coming back quickly if the gambling and the poor decisions haven't come to a screeching halt. Agreed? Agreed. 100%. So has it? Yes, it has. No more gambling, no more bad decisions.
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Chapter 3: What advice is given about debt consolidation?
Yeah, it took longer than it should, but yeah, it's clicked. Okay, all right. So you're a single guy, you have no bills except a house, and you have $200,000 to $400,000 to get a hold of, and you owe $200,000. You don't need debt consolidation. You just need to reach over there and take a bunch of that money you've been wasting and pay off your debt.
You'd be debt-free in a year, and you lived on $200,000. Right, right.
I guess the issue is more so just the short-term liquidity, and I've been getting bombarded with calls from some of these debt consolidation— Well, you have enough coming in to pay minimums.
Oh, debt consolidation people are advertising to you. Well, so what? I mean, that's not a big deal. I mean, you could do this, but you could use like guardian litigation and they can put you on a four-year plan and walk you out of this, but I wouldn't.
Yeah.
Not when you have the income to pay it off in a year.
Yeah, it's your income. And the debt consolidation may get you, quote, unquote, a better interest rate, but it's not really going to matter in 12 months because you'll be debt-free anyways. So going through a company and paying for that is something that you can do yourself.
Yeah. Honestly, if I were you, I'm going to sit down and go, I'm going to look at the stock options and what the release, the vesting and the release on the restrictions are. Have you got a pile of that stock laying there somewhere?
I don't right now. Everything that has vested throughout this year already has already been liquidated. And sold. Right now, yeah.
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Chapter 4: What are the behavioral aspects of managing debt?
All right. All right. This weekend, gone. Now, here's what Rachel's talking about. We're going to give you this every dollar budgeting app, and we're going to give you the premium version. We're going to pay for it free, okay?
And then you and your wife are going to sit down tonight, and you're going to look at, okay, here's what our take-home pay is for me and my take-home pay for you for this month. And then we're going to take this month's income, and we're going to give every one of those dollars an assignment in the budgeting app.
This much for food, this much for house payment, this much for electricity, this much for water.
Insurance, yeah.
This much for whatever. You go write down your life, and you say this is where the money is going to go, and every dollar has an assignment before it comes to you. And then when it comes to you, you simply do exactly what you had already planned to do on paper.
And if something pops up, and it will, then you look at the digital app together and you say, if we're going to do this thing that popped up, what are we not going to do that we take off of here? so that we can do the pop-up. Or we look at the pop-up and say, no, we're not doing it. I don't care if you popped up or not. We don't have the money because every dollar has been assigned.
But I mean, if a tire goes out and you have to buy a $200 tire, then you look over there and you go, okay, I got to increase car repairs by $200 and I got to decrease something else in the budget by $200 so that this continues to match and we don't get behind.
And you work on that together, and you need to have a budget committee meeting and go over this and stick to it once a week minimum right now until you get the feeling of organized. So you're telling your money what to do on that digital app. And then that app is going to tell you what to do so that you do what you said you wanted to do. That's how this works.
And it's easy, David, that with the premium version, you connect your bank account. So anytime you guys swipe your debit card, because no more credit cards, when you're swiping your debit card out of the checking account, a transaction pops into that app and you drag and drop it so you can see literally how much you have left in each category. Like it is right there with you.
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Chapter 5: What personal information should I remove from public records?
Things like your home address, your phone number, and even your relatives' names. You guys, that is just crazy, but that is why I use Delete Me, because those companies pull information from public records, social media, and all kinds of other places. Then suddenly, all that information shows up on random websites.
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Well, we wish we could get to every single call and question here on the show, but we can't. There's only so many lines and so many minutes to be on the air with you. So if you do have a money question, we have an answer for you. And it's head on over to the website and use AskRamsey at RamseySolutions.com.
Chapter 6: How does AskRamsey help with financial questions?
AskRamsey. AskRamsey is our free AI tool. The only data in AskRamsey is Ramsey data. We took three, four years of this show and put every call and dumped the answers in. We took all the books we've written, dumped them in. We took all the articles, and there's thousands of them on our website, and dumped them in. There's no Reddit in Ask Ramsey. If you don't know what Reddit is, it's a sewer.
Okay? And so the way AI works is it can only spit out what you put into it. So if the data set is clean, the answer is clean. And the data set in Ask Ramsey is 100% Ramsey clean. That's all it is. So you're going to get an answer almost as smart, Alec, as you would here on the air. And exactly the same stuff. And it's quick and it's easy and it's completely free.
So ask your question today at RamseySolutions.com. Click the link in the description if you're listening on a podcast or YouTube. Check out Ask Ramsey and tell your friends about it. It's completely free. It's just like calling into the show.
We should make a version someday where you can click what type of answer. Do you want a Dave answer? Do you want Rachel? Like in the tone at which you get your answer, right? And it would be like, I'd be like, hey, guys, it's going to be fine. Here, here's what you do. And Dave's going to be like, you're stupid. Deloney's going to be like, how's your dad?
I like you, and I just don't think that that's smart.
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Chapter 7: What are the best practices for budgeting with a new baby?
And Dave's like, stop it, you fool. Stop it, you're dumb.
And Deloney's like, how's your dad? How's the relationship with your dad? You know?
jade will be like girl let me tell you i don't know that could be good i'll tell i'll send an email after the show give him my idea george will pull oh george let me get the calculator out and we will figure this out together he's gonna nerd out loves that investment calculator all right there we go michelle is in raleigh north carolina hey michelle what's up hi dave hi rachel um
I've been playing with the Ask Ramsey, and I always imagine George Campbell is the one.
That's all we needed, Michelle. Thank you. Thank you.
It's a very precise answer.
You will get a good answer, especially if it has to do with investing. So that's great.
But I wanted to ask you all this one. Quick background.
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Chapter 8: How can we handle debt while preparing for a child?
I'm 32. My husband is 34. We make about $100,000 a year. We have $230,000 in retirement. Way to go. Thank you. My husband and I are both military. He just gave money or GI Bill to our two children, which are five and two. And we have $10,000 and they're $529,000. And we're investing $200 a month.
into their 529 but uh i just wanted to see like is that enough should should it be more um again they would get 12 months of his gi bill which i think actually equates to more than just one school year so his gi benefits for children's college education is one year of his income um No, so the GI Bill would cover 12 months of school for each child.
Oh, I thought it covered all of it. Oh, cool. Interesting. All right, so you got 12 months. All right, so what I would do is just say, all right, where are we going to be living, do we think, when we retire from the military? In other words, where will be the state school that we are the resident? You want to guess? What state?
North Carolina.
North Carolina. You'll still be there. Okay. All right. So, you know, University of North Carolina or whatever, that's a state school. All right. And what is the tuition? $14,000 a year. What's room and board? Probably about double that. Probably about that much again. So probably $25,000, $30,000. Times four. So $120,000. Oh, minus one.
year because military's picking that up three yeah so times three instead so now we got 90 or 100,000 bucks so our 10,000 at two years old what's it going to turn into by the time we get there and plus our 200 bucks is that going to turn into you know 100,000 bucks you're going to be pretty close
Yeah, but also looking at the rate of tuition increases, what the average has been year to year, because it's one of the wildest.
And I would underfund the 529 and overfund some of your other investing that you could use at that point. Because what happens a lot of times is by the time you get there, two or three things can occur. One is they get scholarships, right? for whatever reason. A, they applied for them. B, they're academically or athletically gifted.
And if they get a scholarship, the amount of their scholarship can be removed from the 529 with no penalties or taxes. OK, so, you know, but that money now is set free instead of being trapped in the 529 growing tax free. So that's one thing that can occur. Another thing that can occur is you guys are sitting on a pile of money by then because you're doing a great job.
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